Coffee Can Portfolio - Small Cap ( <1000Cr )

ValuePickr Stock Screener
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Hi,

While going through Saurabh Mukherjea’s concept of Coffee Can Portfolio ( Reference news: https://economictimes.indiatimes.com/markets/expert-view/how-ambit-coffee-can-is-a-10-year-twist-on-buffets-investment-philosophy/articleshow/61750102.cms ) , I tried screening the list of small-cap companies qualifying this concept.

There are 124 companies which qualify condition of (a) Sales growth 10Years more than 10% (b) Average return on capital employed 10Years more than 15% (c,) Market Capitalization less than 1000 Crore

Here it is. https://www.dropbox.com/sh/5a21rnw1kjabaep/AABv6M0SFZ6IaRT_nJHTr_2ea?dl=0

thanks for your expert views.

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its a good starting point to hunt for good small cap stocks. Can you refine further to have even less stocks for detail research.

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Very good work .Given the base for growth is lower ,we can have a higher cut -say sales growth of 15/20% which will make the list smaller

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Great work Kartiks ,
In my opinion exclusion of financial companies and zero dividend will be a start point for reducing the list .BQ MQ and other factors has equal importance along with the fundaments .In my experience I came across a reverse multimanager because I fail to recognise the management quality part of the company.
Regards

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Hi Kartik, I would check the criteria again. It is not average ROCE or average sales growth but atleast. So the two conditions are

  1. Pretax return on capital employed of 15% for EACH of the last ten years
  2. Revenue growth of 10% EVERY year for EACH of the last ten years.

For financial cos the criteria is 16% ROE ad 15% loan growth for EACH of the last ten years.

Run the filters again. You will get a much smaller list.

Regards
Anish

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Kartik,

Then this would not be a coffee can portfolio as per the criteria laid down in the original paper and as per the backtest done by Ambit. The idea is to find cos which have done this over ten years without missing a year. Last year they found only 14 cos. In the small cap universe it may be smaller.

Regards
Anish

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After having a quick look, I noticed that the list includes a company which isn’t even trading in the moment.

And, there is another stock, Shah Foods (which i consider as a very low quality company with almost no trading.) They have good capacity but their aren’t using that capacity and the revenue is really low.

Once such stocks are removed, the list can be reviewed and discussed.

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Hi Kartik, thanks for your effort. As I go through the list, I see a lot of companies that are or have been HNI investor favorites in the past. The coffee can portfolio idea was first put forth by Christopher Mayer in his wonderful book 100 baggers, a must read for every value investor IMHO. Your list would be a great starting point as well as a following up point. What I mean is if a stock jumps out of the group owing to the fact that its market cap crossed 1000 crores, then all the more reason to follow and possibly add to our portfolio. In my years of investing, I have noticed that great fortunes are made when small caps become midcaps and midcaps become large caps. Thanks again for your wonderful post and the effort that went behind it.

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Check this screener query… is this any closer?

https://www.screener.in/screens/115081/COFFEE-CAN-Small-Cap/

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Can u add something like decreasing debt or increasing current ratio etc to make it more robust.

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Probably the small cap/mid cap recovery will be slower than expected…

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In medium to long term earnings will matter. These are temporary issues.

Culling of small caps is a global phenomena for a variety of reasons.

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Hello everyone,
Being new on VP and in investing, I recently came across this concept of coffee can.
This query is currently returning 0 companies! :slight_smile: Then again we are 2 years past the time when the query was formulated.
In screener.in I found many different coffee can xyz presaved screens.
Is there an updated coffee can query from any VP members?
Best regards,
Sameer

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From my blog reading and videos I gathered that too, but yes a full read of the original book cant be replaced :slight_smile: putting it onto my to read list.